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Investing Your Money Responsibly

Responsible investing aims to consider environmental, social, and governance factors…

 

Responsible investing is the strategy and practice of incorporating environmental, social, and governance (ESG) factors into investment decisions. Investing in this way aims to encourage companies to act responsibly. It is a forward-looking approach that seeks to deliver lasting, long-term returns in a changing environment.

Financial security is a common goal, but it is essential to have a healthy and sustainable world to enjoy it. Promoting a green-thinking society and addressing issues such as climate change and human rights requires action from all industries, sectors, governments, and international bodies.

Many companies use ESG criteria to ensure they are operating responsibly. Fund Managers use these ESG considerations to identify the risks and opportunities that could affect a firm’s long-term financial sustainability.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

What is ESG? - Environmental

Environmental, social, and governance (ESG) investing is used to encourage companies to act responsibly.

Environmental

Environmental factors consider how a company impacts the planet and how the changing planet affects the company. These include issues such as:

  • Biodiversity: It is important to sustain the variety of animals, plants, fungi, and microorganisms that make up our ecosystems. Human activities are reducing the diversity of natural habitats, ecosystems, and biodiversity levels.
  • Energy Efficiency: Being more energy efficient means using less energy to perform the same tasks, aiming to reduce waste, limit greenhouse gas emissions, and manage energy costs.
  • Water: Life on Earth relies on access to clean and suitable water supplies. Climate change is one of the greatest threats to ocean and freshwater levels, impacting millions of people and ecosystems.
  • Climate Change: Extreme weather events and unpredictable temperatures are largely attributed to human activity and the production of greenhouse gases.
  • Waste: Increased human activity has resulted in increased waste, harming habitats, animals, and people. Reducing waste supports a more sustainable way of living, protecting the environment.

What is ESG? - Social

Social factors relate to how a company interacts with people, including employees, customers, and communities. These factors include aspects such as:

  • Community Impact: Businesses that are aware of the opinions and needs of their local community are more likely to be rewarded with loyalty and support.
  • Human Rights: Protecting people’s rights, liberty, expression, and freedom from slavery is essential and should be available to everyone.
  • Employee Well-being: Promoting diversity, ensuring appropriate pay, offering flexible working hours, and providing employee benefits can increase loyalty and reduce staff turnover, driving business success.
  • Supply Chain Management: The same social principles of community impact, human rights, and employee well-being should be required of companies throughout the supply chain.

What is ESG? - Governance

Governance factors consider how a business is overseen, the integrity and diversity of its leaders, and accountability to shareholders. Factors we take into consideration include:

  • Board Diversity and Independence: Ensuring the right people, with the appropriate skills, experience, and cultural acceptance, are in place to make balanced board-level decisions.
  • Executive Pay: Ensuring that company leaders provide the best value for money while setting and leading business strategies.
  • Reporting and Transparency: Effective communication is crucial for all businesses. We ensure robust reporting and audit processes are in place.
  • Anti-Corruption and Anti-Bribery: All businesses we invest in must adhere to strict anti-corruption and anti-bribery policies.

How Engagement is a key factor in ESG delivery

SJP’s fund managers maintain ongoing discussions with companies in which we invest to ensure continued progress on material ESG matters.

St. James’s Place ensures that:

  • The Responsible Investment team provides sophisticated ESG insight through in-depth and ongoing training.
  • A set of minimum standards must be met by fund managers during selection to ensure Responsible Investment standards are upheld.
  • Fund managers are monitored to ensure they are conducting appropriate engagement activities.
  • St. James’s Place retains control to remove fund managers if necessary.
  • Regular discussions with fund managers take place to review activities and share strategic insights.
  • Processes and activities are transparent.
  • Robust policies and processes are in place to manage any conflicts of interest.
  • Clear expectations are set that fund managers should exercise their voting rights.

The Engagement Model

The St. James’s Place Engagement Model has a number of steps;

  • They define responsible investing standards for fund managers. Continually assessing, selecting and monitoring them.
  • Fund managers apply their responsible investing expertise, encouraging companies to improve practices. And where appropriate, demonstrating ESG expectations.
  • A continued drive to deliver better outcomes both environmentally and for society.
  • Working with our engagement partner Robeco we encourage companies to make improvements across ESG. 
  • We collaborate with industry groups on wider public policy.

The value of an investment with St. James’s Place will be directly linked to the performance of the funds selected and may fall as well as rise. You may get back less than the amount invested.

Responsible investing has come a long way and is in no way a new phenomenon.

How do St. James's Place integrate ESG with their responsible investing approach?

Responsible investing has come a long way and is not a new phenomenon. It involves considering the global impact a business has on the world and the people around it. The need to reduce waste, be more efficient, and consider employees, customers, and wider communities has always been, and will continue to be, good business practice. Therefore, SJP’s embed their responsible investment approach across their funds

 

Fund managers are required to be signatories of the United Nations-supported Principles for Responsible Investment (PRI). This is the industry standard for assessing a fund manager’s overall behaviour in relation to responsible investment, whereby signatories are assessed and scored on their approach.

Active Ownership

Robeco

St. James’s Place has partnered with Robeco, global leaders in company engagement. This partnership allows Robeco to engage with the companies that St. James’s Place fund managers invest in.

 

What impact does this have on you as a client?

Through this partnership, Active Ownership Reports are produced quarterly, allowing us at Wells & Co to provide you with in-depth engagement results. These reports highlight, through real-world examples, how your investments aim to encourage better corporate practices.

 

At Wells & Co we are committed to investing responsibly to support the transition to a lower carbon economy.

Important Information: Past performance is not indicative of future results. The integration of ESG factors into investment decisions does not guarantee positive outcomes or returns. Investments may fall as well as rise in value, and you may get back less than you originally invested. Please consult with a financial advisor to understand the risks associated with investing.